Why New York Community Bancorp Stock Dove by 8% Today

On Friday, it was New York Community Bancorp's (NYSE: NYCB) turn to present its third-quarter financial results. This was met with a fairly sharp and negative reaction from the market, which wasted little time in selling off the stock to the point where it closed more than 8% lower. That was notably worse than the essentially flat performance of the bellwether S&P 500 index on the day.

Deep in the red

For the quarter, New York Community Bancorp saw its revenue fall 7% year over year to $623 million. That was on the back of a 5% slide in total loans and leases, and, heading in the other direction, 5% growth in deposits. As for the bottom line, the bank posted a generally accepted accounting principles (GAAP) loss of $280 million, or $0.79 per share. That was in sharp contrast to the Q3 2023 profit of $207 million.

Citing data compiled by S&P, American Banker said that analysts were collectively expecting only a $141 million loss for the period.

New York Community Bancorp is a major lender for real estate projects in its namesake city. Weakness in that market has badly affected the lender, which continues to provision heavily against real estate loan losses. The company's overall provisioning reached $242 million for the quarter against only $62 million in the year-ago period.

Hello, Flagstar Financial

New York Community Bancorp is in the process of renaming itself; one likely reason is to help put its recently troubled past behind it. The company will be known as Flagstar Financial, and its stock will begin trading under a new ticker symbol (FLG) starting at 5 p.m. ET on Friday.

This is symbolic of the bank it would like to be -- a more diversified lender less dependent on a real estate market that can be volatile. Until it proves that it can successfully morph into such a business, though, I personally would stay on the sidelines with its stock.

Should you invest $1,000 in New York Community Bancorp right now?

Before you buy stock in New York Community Bancorp, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and New York Community Bancorp wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $860,447!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of October 21, 2024

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.